Markets face some scary round numbers 21 Nov 2007 Robots might not mark 1.50, 2, 4 or 100 as special. But such figures are investor signposts. The E1.50 dollar would confirm the message of the $2 pound the US has troubles. A 4% Tbond shows megafear. And $100 oil would prove that speculators can still have the upper hand.
Equities finally start to catch credit woes 20 Nov 2007 Just over a month ago, the S&P 500 hit an alltime record. It has fallen 10% since then, as investors realised that wider spreads and much higher loan losses were likely to hurt growth and profits. But stock markets probably still have more bad credit news to digest.
Freddie Mac mess is bad news for everyone 20 Nov 2007 The mortgage giant was created to help stabilise volatile mortgage markets. But after losing $2bn last quarter it needs to raise capital, which will be tough and expensive. If that doesn t shore it up, Freddie might have to slash its mortgage book. That would roil US housing even further.
Pressure on dollar grows, for good reasons 19 Nov 2007 Some Opec members are trying to wriggle out of their dependence on the US currency. The motivation is partly political, but the investment case against the greenback is sound. The US has big debts, low interest rates and the ingredients for an inflation problem.
Buyout loan market’s new investors bide their time 16 Nov 2007 The mutual funds, distressed debt investors and credit hedge funds that snapped up TXU, First Data and other buyout debt in the last two months are now sitting on the sidelines. For some, that makes sense. They re betting the credit market s swoon will lead to better terms.
Schwarzman contradicts himself – again 15 Nov 2007 The CEO of Blackstone says analysts profit estimates are too low. That sounds a bit like giving guidance, something the private equity firm said it wouldn t do. But Schwarzman needs to reveal more if he wants investors to have any confidence in a higher valuation.
Speculators may exit as commodities turn 15 Nov 2007 Speculation has been a part of the commodity price boom. Funds have gone short the dollar and long commodities. But weakening demand, especially in the US, may undermine the commodity speculators.
Global growth should be marked down to market 15 Nov 2007 The IMF says the world economy grew by 5.4% in 2006. But it relies on a model of purchasing power parity. Investors should be using market values of currencies. That gives a growth rate of 3.8%. The IMF s model also uses bad assumptions. China s PPPGDP is about to be cut in half.
HSBC rings financial alarm again 14 Nov 2007 The global bank has raised its provisions for the US consumer slowdown. This time unsecured loans as well as subprime mortgages are to blame. That may not be just bad news for HSBC. Given that it has been a leading indicator of financial damage, it looks an issue for peers too.
Amaranth’s lawsuit against JP Morgan reveals two botched bets 14 Nov 2007 The defunct hedge fund lost a bundle on a huge natural gas wager. It now alleges that JP Morgan exploited its role as its broker to block white knights. The suit s merits are debatable. But the debacle illustrates a second bad bet: leaving a fund at the mercy of a single broker.
UK economic outlook is even gloomier than BoE thinks 14 Nov 2007 The Bank of England predicts a sharp slowdown in the UK economy and expects to cut rates even though inflation will rise a little. That makes the UK a pale shadow of the US, according to the Bank s Governor, Mervyn King. But that shadow is likely to darken.
Och-Ziff IPO shrugs off jitters to price for perfection 14 Nov 2007 The hedge fund, which manages $30bn of assets, picked a good day for pricing its offering and got a high price. OchZiff is a quality name in the hedge fund world, but the valuation doesn't allow for any disappointments.
Global markets struggle with a great reversal 13 Nov 2007 For years, consumer inflation was low and asset price inflation was high. It was the investor version of paradise. But the pattern has reversed most asset prices are under pressure and retail inflation is increasing worldwide. For investors, it s a painful spell in purgatory.
Blackstone could take a lesson from Fortress 13 Nov 2007 The private equity and hedge fund group missed earnings estimates a day after rival Blackstone did. But investors took it in stride. That s partly because Fortress has been public longer. But it also presents its complex business more clearly. Blackstone could learn a thing or two.
E*Trade, money funds should envy hedge funds’ lock-ups 13 Nov 2007 Their shareholders, like those of Northern Rock before them, worry that depositors will pull out their money on short notice. Most hedge funds lock up their investors' capital for months. That s why they re better placed to own illiquid subprime assets.
Pakistan’s stock market proves resilient 13 Nov 2007 The Karachi100 share index has barely budged in the ten days since President General Musharraf hijacked the judiciary and imposed a state of emergency. Investors believe that Pakistan won t stray from its probusiness path, whatever comes next.
EU slides into protectionism 13 Nov 2007 When Peter Mandelson came to Brussels, he was an avowed free trader. But the EU trade commissioner seems to be succumbing to protectionist arguments. He has approved import duties on Chinese shoes and strawberries. It s the wrong way for the EU to respond to the strong euro.
Rating agencies’ shield against lawsuits has holes 13 Nov 2007 US courts have often accorded credit ratings constitutional protection as free speech. But this muchtouted barrier to litigation could be permeable and all the more so because the most recent CDOinduced credit mess is anything but massmarket.
Blackstone predictably disappoints investors 12 Nov 2007 The private equity group is not alone in having a complicated business. But its investors are grappling with three different measures of profit, a structure still in transition and a shortage of benchmarks. Still, lacklustre earnings shouldn't have surprised them.
Chuck prints much less money than Stan on exit 9 Nov 2007 Prince is leaving Citi with a nestegg worth less than $30m. O Neal left Merrill with $160mplus. Partly that reflects Citi s weaker stock performance. But the bigger bank seems to be less generous at the top, too. Let s hope it can stick to that as it looks for a new CEO.